This article was originally published on Open Forum and has been re-posted here with permission.

Demoting an employee - especially someone whom you hope will stay with the company - is never easy. Perhaps the employee is not doing well in a new position. You’ve tried coaching and talking to this person but it’s just not working out.

How do you break the news to that person without unleashing a flood of potential problems? The employee may quit, become resentful, unproductive and lower the morale of other employees.

Minimizing the repercussions of demoting an employee takes careful planning and a lot of tact, and even then the result may still be negative. If you are determined to go down this route, here’s how to do it:

Identify your reasons for demoting the employee

Look at why you’re demoting the person. The circumstances will determine the type of corrective action and transitioning you should take. Is it for financial reasons that are truly beyond the employee’s control? Is it more of a performance issue? Is it an attitude problem? Has he or she been previously promoted beyond the appropriate level? Keep in mind that simply demoting someone will not solve performance or attitude issues.

Communicate with the employee

Be sure to speak with the individual privately before you move forward with the demotion. Explain your reasons clearly and do your best to help him or her accept the change. Chances are the employee already knew something was wrong and may not be entirely shocked. Document your meeting and subsequent conversations in case you need to show proof that you acted fairly.

Assign meaningful work

If you want to retain the employee, explain that you value that person’s work and are placing him or her in a position that would make better use of his or her talents. Follow through on that statement. If this person was unable to successfully adjust to being a manager, for example, assign him or her a solo project that would allow the employee to make a significant contribution to the company. If the demotion involves a pay cut, start with a transitional salary.

Present the news in a professional manner

Regardless of how you phrase it, the office will probably be buzzing about the news that so and so was demoted. The best you can do is to help that employee retain his or her dignity. Do not let it appear that you pity the employee, and publicly praise that person for his or her contributions in the new role.

Follow up with the individual after the demotion

In addition to meeting with the employee, observe how he or she is reacting to the new role. Also keep an eye on how other employees are reacting to the change.

Have a contingency plan

“Demoted employees should always be viewed as having one foot out the door,” writes Peter Woolford in Tech Republic. If you hand them a key project when you demote them, you should have a contingency plan in place in the event the demoted employees suddenly walk out on you.” Some employees may be grateful to still have a job, others might start looking for a new one immediately. Be ready in case the latter comes true.

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